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Why does bank charge a returned item fee?

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The fee for a bounced check honestly does not bother me. It's if I deposit someone's bad check, and my bank hits me for a fee. That is the worst. Like I would knowingly deposit a bad check.....It punishes an innocent party. That is what I hate. And what should be illegal.

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I hate it too. But why the illegality? Wouldn't it be nice if we could make illegal everything we don't like?

Charge it back to the person who gave you a hot check. That's what I do. I've had tenants bounce checks before. I pop them for $30. My bank charges $10. But I don't feel bad because 1) it creates an inconvenient headache for me and 2) I want to deter this behavior.

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I hate it too. But why the illegality? Wouldn't it be nice if we could make illegal everything we don't like?

Charge it back to the person who gave you a hot check. That's what I do. I've had tenants bounce checks before. I pop them for $30. My bank charges $10. But I don't feel bad because 1) it creates an inconvenient headache for me and 2) I want to deter this behavior.

Precisely right! There has to be a deterrent component in the fee. As I said earlier, this is why I think fees need to be raised to at least $100. The fees at $30-$39-obviously-aren't deterring anyone from overdrafting his/her account. Perhaps, this is counterintuitive, but the higher the fee, the less income banks will make. This is because once a fee begins to deter that behavior, volume of fees decreases. If you have the data, you can interpolate it into a function of volume vs. fee amount. Then it becomes a very simple applied maxima/minima problem [right out of basic Calc I]. Maybe even the OP would make a concerted effort to balance his/her checkbook, if s/he were receiving $100 fees regularly....

The fee for a bounced check honestly does not bother me. It's if I deposit someone's bad check, and my bank hits me for a fee. That is the worst. Like I would knowingly deposit a bad check.....It punishes an innocent party. That is what I hate. And what should be illegal.

When you endorse a check, you have vouched for the validity of that item. You shouldn't endorse a check if you have questions. You have two options here:

(1.) Call the drawing bank to verify funds before depositing. If they tell you that funds are not available, then do not deposit.

(2.) Go directly to the drawing bank for collection. Note: this will likely cost you a fee as a non customer.

Most states allow you to sue the maker of the check for civil damages for a bounced check. In my state, it's 2.5 times the face value of the check or $100, whichever is greater. So, you're never really on the hook for this fee, anyway. Simply pass it along to the maker of the check AND don't accept a check from that person/company again. Make them pay you in certified funds or cash.

Anyway, your assessmnet of my situation is about 50% correct. The best misinformation is mixed with good information. You are good at this. You give out informative, detailed opinions and then slip in incinerary comments which make any of the good information you previously gave suspect.

Which 50% was incorrect? :lol: What did I say that is informative and detailed, but at the same time only an opinion? Perhaps, if I explain it differently, you will see that I gave you facts.

My biggest problem is with debit cards (either using a PIN or as a visa/mastercard logo) and POS transactions. In my opinion, the bank should deny the transaction and NOT charge the overdraft fee. To alow the transaction to go through and the customer to become overdrawn, and thus charging the fee, is simply gouging the customer. It costs no more to allow that transaction go through than it does to deny it. If a bank allows a customer to become overdrawn by allowing the POS transaction, then it's the banks fault. Or at least just as much the banks fault as the customer.

I think at minimum, at the time the account is opened, the banks should be required to give the customer the choice of either allowing POS transactions to occur and charging a fee if overdrawn, or denying the transaction and not charging the fee. The customer can then make an informed choice, and if they choose to allow it and get hit with fees, then at that point they have no one to blame but themselves.

.....Turns out, the customers did not really want that service or did not understand what the service meant. I am sure now that there is a backlash on it, the banks will implement the system where you are given a choice to deny the charge before you overdraft rather than charge you on it....[banks] have the most current information available to them whereas the account holder often does not - especially at the POS.....

....Going back to the $40 hamburger...I think most consumers would simply reach into their pocket for $5, pay the POS and go online when they got home to see what was wrong with their account. No embarrasment involved here - just the bank putting forth excuses for their money grabbing.....

....But wait, it's too late. The account holder was not given the choice of overdraft / no overdraft. And, imagine if this were Christmas and the account holder was visiting a litany of stores?....

This isn't really possible because often times, the bank doesn't even know your true balance as I discussed earlier. many places of business use temporary holds that never equal the actual amount you purchased. When you purchase gasoline, a pre-auth of $1.00 is made then released. The actual purchase may be as much as $75.00. The bank won't know this amount until the transaction is presented for payment, thus this purchase will never show up until it posts, making your available balance look far greater than it really is, so you might be tempted to spend the money elsewhere and when the gasoline purchase is settled a few days later, you get hit with overdraft charges. Restaurant holds, T&E holds, many other SIC codes don't allow debit holds for longer than 24 hours. So, you could swipe your card a bunch of different times and the bank cannot keep track of this [by law and for your own protection at that] until the charges are presented for settlement several days later. In the interim, because you don't keep a register, nobody actually knows your real, current running balance. Not you, not the bank...

Also, many smaller merchants aren't required to check your balance through their card processor and some don't even have the ability to do so. At many mom&pop retailers, if the transaction is under $20, it's automatically approved and some retailers don't check balance at all for any amount. Once the transaction is approved, it will be force-paid, no matter what. If funds aren't available, the customer is on the hook to the bank or card issuer...

Forcing many merchants to get new machines to implement this process would be incredibly costly. It would also be incredibly stupid. If we are going to do an overhaul of the card processing infrastructure, ideally, we would switch to "chip and PIN" Smart cards in use in the rest of the world, but it seems unlikely anyone wants to outlay that kind of cash to improve a system here that has worked for [almost] everyone.

This is pie-in-the-sky thinking and isn't rooted in reality. The costs would be outrageous and they aren't justified when the sole purpose is to protect people from themselves. It is possible to implement this at ATM terminals, but even then, as noted above, the bank doesn't always know your balance due to inaccurate holds and/or floats that aren't showing on your account. It would still be possible to overdraw an account even with this measure.

The only surefire way not to pay overdraft fees is to spend less than the available balance in the account. It's really not hard.

A few posts back, you stooped to name-calling, which basically states that you could no longer attack the message, so you were now going to attack the messenger. You conceded defeat when you did that.

Just because you don't understand history and how we are repeating it doesn't give you the right to attack someone for their viewpoints. That shows that YOU are the nutjob. I tried to keep this conversation civil, and I don't want to stoop to your level.

Show me that you are better than this and argue the merits of something without name calling. All it does is make YOU look bad.

OK. So, you want to abolish the Federal Reserve and stop paying interest on our bonds [note: this is the same thing as defaulting]. Then, you want to eliminate broad money supply and right off the bat kill 10 million jobs in loan processing. It seems likely this would cause a deflationary spiral tenfold worse than the Great Depression. If this isn't what you want, explain it to me. The system isn't broken, it just needs some tweaking.

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http://www.walletpop.com/blog/2010/03/09/bank-of-america-ends-overdraft-fees/?icid=main|htmlws-main-n|dl7|link3|http%3A%2F%2Fwww.walletpop.com%2Fblog%2F2010%2F03%2F09%2Fbank-of-america-ends-overdraft-fees%2F

For some people, this may come as a shock, but surely, for many others, this is going to come as a huge relief. It may be annoying to have your card declined, and it may cause a hassle, but it's also a hassle to realize your bank account is now $172 in the red because you made a couple of unwise purchases, not realizing your checking account was so low that your $3 taco has just cost you $39, or your $14 fill up at the gas station has meant shelling out an extra $37.50.

Remember my argument about the guy buying a $5 dollar hamburger without knowing he was actually being charged $40? It seems Bofa finally got it that we didn't want them to be "nice" and save us the embarrasment at the POS. But then, everybody already knew that Bofa was just conjuring up a seemingly plausible reason to continue raking in millions every year.

And guess what else...you guys who have been quite happy with the banks charging us poor people glutinous amounts of over drafts and other fees so that you can bank for free, it looks like you may have to start paying your fair share.

With the banks standing to lose billions of dollars in fees, could this mean the end of free checking? Will there be other, ominous fees that may take the place of overdraft fees? Stay tuned ...

I came by this article by chance on AOL and have not heard the reason for the change but I'd bet my bottom dollar it's due to the litany of lawsuits I told you guys about.

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And guess what else...you guys who have been quite happy with the banks charging us poor people glutinous amounts of over drafts and other fees so that you can bank for free, it looks like you may have to start paying your fair share.
Another option is to take five minutes every day and balance your checkbook. That's what adults do.

I could care less if BoA became insolvent tomorrow. They're an awful gigantic banking institution. But this is setting the bar so low to protect fools who feel entitled to the privileges and convenience of a checking account without the responsibility that comes with it.

BoA has done this voluntary, not by federal law. It was federal law in this area that was objectionable, not changes in bank policy.

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Another option is to take five minutes every day and balance your checkbook. That's what adults do.

I could care less if BoA became insolvent tomorrow. They're an awful gigantic banking institution. But this is setting the bar so low to protect fools who feel entitled to the privileges and convenience of a checking account without the responsibility that comes with it.

BoA has done this voluntary, not by federal law. It was federal law in this area that was objectionable, not changes in bank policy.

JQ adults ought to balance their check books. And me and my husband do it with a paper ledger; every expense we incur is put down in the book so we have things down to the penny. BUT every now and then you get a charge that you cannot trace its origins. I got a $0.10 charge by some vendor with whom I had done business in the past. They took out ten cents out of our account since everything was down to the penny, that ten cents caused my account to go over. I got a $28 fee for a ten cent charge that I don't recall authorizing at all! This happens more frequently than you realize.

Also, we keep our ledger and then compare it to our online bank ledger and sometimes we cannot make heads or tails of what they have! The balance is different than the account balance but there is no explanation for this if there are no pending charges. In fact, I've called my credit union about this before and one of the reps admitted that they've had complaints about their online system.

With all of the fees that people are charged simply for doing business, it isn't unrealistic that a few dollars worth of fees might be omitted from the ledger calculations...

But the most important thing is that banks are supposed to hold their depositers money! I've heard people say that the only function of a bank is to maximize profits for their shareholders, but that should not be the case. The banks should not have an adversarial relationship with their customers because they are ostensibly providing a SERVICE to them.

BoA never does anything without reason,but I am glad that they've decided to do away with raping their customers.

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Actually, from what I have read, what they are going to do in this case is something similar to what ING does. If there is not enough money in your account to pay the charge, the charge will be denied.

However, the rep at the bank where you open your account will be willing to sell you an overdraft protection loan where if you do go over, you will not be denied and you will not be charged an overdraft fee, but you will be charged interest on the amount you went over. Although right now, ING charges about 8% interest, how much do you want to bet that BOA will be willing to go that low when they can get away with credit card type rates.

I know that people will be allowed to say no but the way the sales pitch will be worded, will the average person know what they are buying or will the be scared by the fact that their card could be denied.

I doubt BOA will lose money from this in the end and those who cannot balance their checkbooks will subsidize those who do. Besides, it may not be simple for BOA to start charging for checking accounts if the bank or credit union across the street who never really raised their overdraft fees to the level of BOA offers free checking.

Trust me, BOA has already looked into how to cushion the blow from this.

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Another option is to take five minutes every day and balance your checkbook. That's what adults do.

You seem troubled...thinking about the new charges your bank will be dreaming up and wondering how it will affect you? Maybe they will start charging you for depositing your renters' checks...maybe $35 a pop???

BoA has done this voluntary

Yea, but they could read the handwriting on the wall.

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